Joseph J. Petrillo | Federal Contract Law: Acquisition advisory panel meets resistance

Joseph J. Petrillo

After months of activity, the Acquisition Advisory Panel issued its findings and recommendations for acquisition of commercial items. Some of this document reads like a syllabus for Procurement 101. 'Commercial organizations invest the time and resources necessary to understand and define their requirements.' Not a bad way to start a procurement or a report on how to do it right.

The panel said commercial buyers 'rely extensively on competition' to get the best price. Guess they don't like to pay too much, either. This was a surprise only to those who think 'buying commercial' means giving the contract to the company that employs your in-laws.

But starting with the basics makes sense because of how far so many have strayed from the fundamentals of sound acquisition. As political philosopher and author of The Modern Prince Antonio Gramsci said, 'It is precisely the first elements, the most elementary things, which are the first to be forgotten.'

The panel suggested nine specific recommendations, including better definitions of requirements and improved competition. They recommended that the stricter Section 803 rules now applicable to Defense Department procurements apply governmentwide. These rules generally require a minimum number of offers when ordering from indefinite-delivery and GSA schedule contracts.

The panel also supported a more robust process for awarding orders worth more than $5 million, including disclosure of evaluation factors, documenting the award decision, debriefings and protest rights. It is a 'lite' version of Part 15 competitive proposals.

Better synopses of sole-source orders and more controls on time-and-materials pricing rounded out the recommendations.

All in all, the panel proposed an evolutionary and gradualist approach. That's why it is so odd that they provoked a vehement reaction from a coalition of six trade associations. This group, spearheaded by the Information Technology Association of America, charged that the recommendations 'threaten to roll back a decade of procurement reforms.'

But if you read their specific comments, you only get more confused. The associations actually endorse many of the recommendations, and they have only minor cavils with others. For instance, the associations agree with the panel on extending Section 803 rules to civilian agencies, so long as they implement the same procedures as DOD. The panel also supports debriefing for large orders but doesn't like the idea of removing the exemption that keeps these awards from being protested.

There are only a few major objections. One sticking point is the panel's idea that standalone services, to qualify as 'commercial,' should actually be sold to the public. But the associations' criticism, that the government should be able to buy 'cutting-edge products,' doesn't apply to services. Go figure.

Another bone of contention is the panel's proposal to get more information on prices and costs, when there isn't any competitive data. The associations are probably worried that this slippery slope will lead someday to cost-buildup pricing for commercial items. That's a valid concern, but they don't offer an alternative.

They also complain about the recommendation that nonprice factors should rarely be 'significantly' more important than price. But tradeoffs between price and nonprice factors (like technical approach or past performance) are usually judgmental. Is a superior solution worth a higher price?

When you add up the objections, they hardly seem to justify the scathing tone of the associations' report. With the coming elections, nothing will happen until next year. Then we will learn if the opposition of these groups is enough to veto the panel's suggestions.

Joseph J. Petrillo is a lawyer with the Washington law firm Petrillo & Powell. E-mail him at jp@petrillopowell.com.

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